14 DAY TRIAL // World-leading plasma TV-maker Panasonic announced that it would be paying no less than $4.6 billion to Sanyo in order to acquire a majority stake of 50.2% of its total shares. The deal will allow Panasonic to make use of Sanyo's expertise in solar panels and rechargeable batteries, whereas its smaller rival will be able to stabilize its financial situation with the received capital. Panasonic will retain the Sanyo brand and will continue to list its shares on the Tokyo Stock Exchange.
Panasonic was interested in acquiring a majority share since over a year ago and it seems that Sanyo's financial issues have finally given way to this move on Panasonic's part. The $4.6 billion are the equivalent of 403.78 billion yen (the cumulative price of the shares), with each share priced at 131 yen. This is a lower price than the actual market price of the shares, which is also the most likely reason why Panasonic wasn't able to persuade Sanyo shareholders to sell more.
The reason behind Panasonic's 13 month-long wait was not the unwillingness to sell on the part of Sanyo. The former had to wait for clearance from anti-monopoly authorities in the U.S., China and the European Union before being allowed to initiate the takeover. Actually, Sanyo seems to have been waiting for such a development in order to continue functioning and being taken over by Panasonic might have actually been preferred.
This is possible considering the fact that the company itself was founded by a brother-in-law of Panasonic founder Konosuke Matsushita. Sanyo had a 30.6-billion-yen loss between April and September, compared with an 8.7-billion-yen profit during the same period in 2008.
Panasonic was able to score this deal after Sanyo's three major shareholders agreed to transfer the ownership of 3.07 billion of their own shares for the aforementioned per-share price. These three major shareholders are Goldman Sachs, Daiwa Securities SMBC and Sumitomo Mitsui Banking Corp., with all three combined controlling no less than 70% of the total Sanyo outstanding shares.
Even though Panasonic had to settle for a minimum controlling share, it will still reap the benefits of its rival's technological know-how. Following the announcement of the agreement, Sanyo's shares grew by more than ten percent, specifically to 176 yen per-share on Thursday. At the same time, Panasonic's shares dropped by 1.9 percent, to 1,226 yen.
The deal is expected to close on December 16.